Sale of Vodafone Hungary takes step forward

The proposed sale of Newbury-based Vodafone’s Hungarian subsidiary has moved a step closer after the telecoms giant agreed non-binding terms.

The agreement, entered into with Hungarian IT service management firm 4iG and financial institution Corvinus, would see 100 per cent of the subsidiary sold for $1.8 billion.

The combined company would become the clear second placed operator in the country and work towards the Hungarian government’s goal of creating a national information and communications technology champion.

The two firms currently have limited overlap, meaning their services would complement each other and create stronger competition for the incumbent operator.

Nick Read, Chief Executive of Vodafone, said: "The Hungarian Government has a clear strategy to build a Hungarian owned national champion in the ICT sector.

“This combination with 4iG will allow Vodafone Hungary, which has a proud history of success and innovation in the country, to play a major role in the future growth and development of the sector as a much stronger scaled and fully converged operator.

“The combined entity will increase competition and have greater access to investment to further the digitalisation of Hungary."

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The news comes among ongoing speculation regarding a merger between Vodafone and Three in the UK.

Talks have been ongoing since at least the start of 2022, and the CEOs of both companies have spoken about how the “fragmented” nature of the UK telecoms industry limits investment.

Although they are two of the biggest operators in the UK, the rise of 5G has brought about a convergence of telephone technologies which puts their business models under pressure. It has been argued that a merger would give the pair the scale to compete and respond to the challenges ahead.

In July, Nick Read said: “I really can’t comment on press speculation. What I would say is that if I look at a higher level at the UK market my view is that it remains a very fragmented market which is resulting in poor returns and under investment.

“You could look at the UK and say it needs two fixed networks, which it has, and three mobile networks to give a healthier structure for investment going forward.”

For the latest updates on the possible merger, read more here - Updated: What we know so far about the potential merger between Three UK and Vodafone